This hearing is the first of several that we intend to have during this
Congress on reforms to the Clean Air Act. This is an issue that is critically
important to me and to my home state of Ohio, a major manufacturing state.For several years now, this Committee has been
grappling with the complex issue of how to clean our air by reducing emissions
without putting our economy in a stranglehold. Today, we are here to discuss
the Clear Skies Act (S. 485), which is a proposal sent to us by President Bush
to reduce power plant emissions and protect our economy.

As we hear testimony on Clear Skies from our three distinguished panels
today, I think we need to keep in mind the important context in which we
consider this legislation. It is no secret that our economy is struggling. One
of the key reasons our economy is sputtering is that we don’t have an energy
policy. As I have often stated, we sorely need to develop a long overdue energy
policy for our Nation. As a member of the Energy Task Force, I will do
everything I can to work for passage of an energy bill that harmonizes the
needs of our economy and our environment this year. These are not competing
needs. A sustainable environment is critical to a strong economy, and a
sustainable economy is critical to providing the funding necessary to improve
our environment.

We need a policy that broadens our
base of energy resources to create stability, guarantee reasonable prices, and
protect America's security. It has to be a policy that will keep energy
affordable. Finally, it has to be a policy that won't cripple the engines of
commerce that fund the research that will yield future environmental protection
technologies.

Right now, about 86% of the electricity generated in Ohio comes from
coal-fired facilities. For generations, the use of coal for electricity generation
has not only provided affordable and reliable electricity for Ohio
manufacturers, it has helped to keep the costs of natural gas down as well.
This combination of affordable electricity and low-cost natural gas is
absolutely critical to the health of Ohio’s manufacturing base, and our
Nation’s manufacturing base.

The absence of a comprehensive national policy that harmonizes energy
production and environmental protection has led to an unfortunate (and
predictable) situation in which the rules and regulations intended to protect
our environment are threatening to undermine our economy while failing to
achieve significant environmental goals.

The Clean Air Act, enacted in 1970 to protect and enhance the quality
of the nation’s air resources, has been extremely successful in reducing
emissions of pollutants. As these charts show - Since 1970, emissions of all
criteria pollutants have been reduced by 29 percent – despite the fact that
energy use is up 42 percent [CHART 1], electricity use has grown 159 percent
and Gross Domestic Product has grown 158 percent [CHART 2]. However, the
current approach to regulation utilized by the EPA is plagued with burdensome
and overlapping regulations that are subject to costly and time-consuming
litigation and have become unnecessarily costly.

There are now more than a dozen separate regulations on the books for
sulfur dioxide (SO2) and nitrogen oxide (NOx) alone – with additional
regulations around the corner. As this chart illustrates, the regulatory
process at EPA is long, complex and costly [CHART 3]. Further,
litigation over several of these regulations has already delayed their
implementation, forestalling the air quality benefits that they were designed
to achieve. This patchwork of existing and soon-to-be-implemented regulations,
coupled with the delays bred by continuous litigation over them, has created
enormous uncertainty for utilities, co-ops, and municipal generators. This
uncertainty has curtailed investments in technology that would reduce emissions
at existing plants, prevented numerous new facilities from coming online, and
caused several utilities to try to phase-out coal-based generation altogether
by fuel switching.

Fuel switching – changing from coal-based generation to natural
gas-based generation – is a tremendous threat to the economy of not just Ohio,
but to the Nation as well. There are currently over 5,000 power plants in the
United States that generate over 850,000 megawatt hours of electricity
annually. In 2002, 19% of our electricity was generated by natural gas – as
opposed to 50% generated by coal [CHART 4]. Reliance on natural gas for
even this much generation has put a tremendous strain on natural gas supplies
and pushed prices on available gas to record high prices.

The President’s National Energy Policy Task Force projected that over
1,300 new power plants will need to be built to satisfy America’s energy needs
over the next 20 years. Because of the emissions limits and regulatory
uncertainty triggered by the Clean Air Act, the Department of Energy currently
predicts that over 90% of these new plants will be powered by natural gas.
Further, analysis by EIA and the EPA shows that a large percentage of
coal-fired plants are likely to be replaced by natural gas-fired plants in the
near future.

We do not have enough natural gas to power all of these new facilities,
and we do not have the capability to increase our supply to meet this demand [CHART
5]. Unless Congress develops a plan to deal with this situation, we are
looking at major natural gas shortages, spikes in natural gas prices, and
spikes in electricity prices.

Shortages in natural gas supply – and the resultant increase in natural
gas prices – do not just affect utilities.Many other industries rely on natural gas – such as the Farming
Community, the Steel and Metal Industries, Chemical and Polymers Manufacturers
and Food Processing Industry [CHART 6]. It is not difficult to
understand why a major shortage of natural gas – coupled with skyrocketing
prices for natural gas and electricity – will ensure that many of our companies
will no longer be able to remain competitive in the global marketplace. I
recently met with a group of Manufacturers in my hometown of Cleveland. I was
shocked when two of them told me that they were seriously considering moving
their operations overseas because of high energy prices.

Although high electricity prices would severely affect businesses and
their ability to compete in the global marketplace, it will have an even more
profound impact on low-income families and the elderly. Everyday, many
Americans are forced to make choices between paying for electricity or food and
other essentials such as medicine when energy prices are high. This chart,
based on Department of Energy statistics shows that low-income families pay a
disproportionate share of their income on energy – which prevents that money
from being used for other necessities [CHART 7]. The Center for Disease
Control (CDC) states that more of our elderly and children die from heat
exposure (8,015 between 1979 and 1999) than from all other natural disasters
combined. The CDC also claims that air conditioning is the number one
preventative factor against heat exposure.

For several years now, I have been trying to work on a bipartisan basis
to head off this oncoming train wreck. During the last Congress, I held several
hearings on the need to harmonize our environmental and energy policies that
highlighted the need to promote energy development and environmental
protection. I worked with Senators Bingaman and (Frank) Murkowski on
comprehensive energy legislation, and with Senator Jeffords and Senator Carper
to try to find a bipartisan compromise on Clean Air Act reform. Unfortunately,
we were not able to enact comprehensive energy legislation or reach a
bipartisan Clean Air agreement, and we are no closer to solving these very real
problems.

In order to defuse the time bomb of skyrocketing natural gas and
electricity prices that is sitting in our lap, Congress must enact a
comprehensive energy policy that will increase our development of natural gas
supplies and ensure that we have a diverse fuel mix for electricity generation
that includes nuclear, renewables, natural gas and coal. To get there, the
Senate must pass both comprehensive energy legislation that promotes domestic
natural gas development and multi-pollutant legislation that will streamline
the regulatory process, maintain the diversity of our fuel mix and achieve
greater emissions cuts to protect our environment.

While the task of passing comprehensive energy legislation is underway
over in the Energy Committee – and I commend Chairman Domenci for the work he
doing on the bill - the task of passing multi-pollutant legislation falls on us
here in this Committee.

Earlier this year, in order to move multi-pollutant legislation that
will protect both our environment and our economy through the Committee,
Chairman Inhofe and I introduced the Clear Skies Act (S. 485) by request. This
bill - which calls for 70% reductions in SO2, NOx, and Mercury - will deliver
far-reaching benefits and maintain energy diversity by expanding and
strengthening a proven mandatory, market-based approach to reducing emissions.

The Clear Skies Act will improve the Clean Air Act by providing greater
certainty that emissions are reduced while providing a stable regulatory
environment that allows utilities to install necessary pollution controls
without the fear that those controls will be obsolete before they are paid-for.
It will result in cleaner air, less regulation and litigation, and lower energy
costs to manufacturers and American consumers. Simply put, this legislation
will provide tremendous benefits to the environment and is crucial to the
long-term survival of our economy and our manufacturing base.

Specifically, the Clear Skies Act would establish federally enforceable
emissions limits for SO2, NOx and Mercury. For SO2, Clear Skies sets a Phase I
cap of 4.5 million tons in 2010 and a Phase II cap of 3 million tons in 2018 –
down from 11.2 million tons in 2000. For NOx, Clear Skies sets a Phase I cap of
2.1 million tons in 2008 and a Phase II cap of 1.7 million tons in 2018 – down
from 5.1 million tons in 2000. For Mercury, Clear Skies sets a Phase I cap of
26 tons in 2010 and Phase II cap of 15 tons in 2018 – down from 48 tons in
2000. These reductions are a not only robust – a 73% reduction for SO2, a 67%
reduction for NOx, and a 69% reduction for Mercury, they would constitute the
largest Clean Air Act emission reduction targets ever requested by a President.

The emissions cap and trading program in Clear Skies is based on the
proven success of the acid rain program contained in Title IV of the Clean Air
Act - which to date has been the most effective clean air program, having
reduced SO2 emissions by 37% through 2000 while saving hundreds of millions of
dollars in compliance costs. The Clear Skies program will provide power plants
with the flexibility to choose among various options for reducing emissions
that best fits their specific circumstances while saving over $1 billion
annually in compliance costs.

Clear Skies also contains several provisions that reform existing Clean
Air Act programs to streamline the regulatory process and help reduce the
existing patchwork of regulations and rules.

The flexibility of the Clear Skies’ market-based cap and trade program
and the certainty of its emissions reduction targets - combined with these
reforms - will ensure that the real reductions called for in this bill can be
achieved without forcing utilities to fuel switch and without forcing
electricity and natural gas prices through the roof. Perhaps most importantly,
Clear Skies will help ensure that the least of our brothers and sisters will
not be forced to forego heating their homes - and that our companies will not
be forced to move overseas to remain competitive in the global market – due to
sky-high electricity and natural gas prices.

As I mentioned at the beginning of my remarks, this is the first of
several hearings that we intend to hold in this Subcommittee on Clear Skies. It
is my intention to mark-up Clear Skies at the Subcommittee level as quickly as
possible and I will push hard to have the full Committee report a bill to the
floor - and to have the Senate pass it – this Congress.

I want to thank our first witness this afternoon, Administrator
Whitman, for coming to present President Bush’s proposal to the Subcommittee.
It is always a pleasure to have the Administrator testify before us –
especially on a topic as important as this one.

I look forward – also – to the testimony of our other witnesses and to
working with the members of this Subcommittee as we move forward on this vital
legislation.